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Amid a host of questions posed by the startup community on our social media pages every day, the most common are the ones related to hacks of raising investment or how to impress an investor or what are investors’ choices in the market.

To come up with a sound reply that can solve the most common yet biggest problem startups face today, we decided to approach a few investors to learn about their views on this.

Talking to about 40 investors on how they evaluate a startup, we received mainly two types of responses from VCs. Value proposition and team — these are the two key areas that investors consider before selecting a startup.

However, many budding entrepreneurs are still clueless about these two clauses as they still consider profitability as the only factor that matters.

Entrepreneur India had a chat with a few venture capitalists to get a holistic view of how they evaluate and select a startup while betting high on it.

Repetitive Ideas in Market

Speaking about how a lot of startups adopt the "me too" approach while starting up in India, Arpit Agarwal, Partner, Blume Ventures, said, “We receive, on an average, about 400 startup pitches a month and most of them arrive with cold and irrelevant ideas. It is rather easy to filter out the request for funding a movie or a manufacturing plant.”

Agarwal also marked that how repetitive ideas around same sectors like e-commerce and food-tech flood them, which lack in innovation and newness of product.

“For us the balance of founding team is very important. Having at least one strong tech co-founder is a big plus and having all founders with no relevant experience is a big negative,” he added.

Asked about what lacks in Indian startups? Agarwal said, “There's nothing that is lacking in Indian entrepreneurs. They are the most ambitious and capable people, generally. He believes that what can be improved is the exposure to real massive scale problems. “Very often entrepreneurs are scratching their own itch and their inexperience in problems of real India (call it 'Bharat') comes to fore. With just an iota of inspiration, a lot can become better,” said Agarwal.

Lack of Glocal Approach

42-year-old Archana Priyadarshini, Venture Partner, Unicorn India Ventures said the value proposition of the idea of building a startup is very important. “Once the startups pass this round, we judge them over what is differentiator in them,” he added. Thirdly, are they being backed by an established player in market?

Unicorn majorly invests in tech-centric startups, and its focus areas are Artificial Intelligence and Machine Learning. Priydarshini told that sometimes startups lack in modifying their idea according to their target audience. “No matter how lucrative an idea you may come across being run well in foreign countries, but for India, you need to tweak your idea according to the problems and opportunities here. Most of the startups are still failing in meeting the needs of people,” he said.

Priyadarshini is one India’s renowned women venture capitalist. Recalling her days of corporate life, Priyadarshini said there are a plenty of opportunities for youth in the current scenario, which wasn’t there 10 years ago. If they make an optimum use of it, they will get better results.

Citing examples of Flipkart and Ola, Priydarshini explained the situation saying, Flipkart came with a credit card payment option first, but Indians were very reluctant for using their credit cards at that time. Then they had to change their payment options and schemes in order to run seamless operations.

Hunt for a Real Problem-solving Startup

Expressing a similar viewpoint, Pankaj Maloo, Founder and Director of Kolkata-based Venture Catalysts, said a hunt for a real problem-solving startup is there in the VC market. VCs are looking for start-ups that are based on a solid and viable business model, no matter if it is a tech-based startup or some other.

One thing that should be a complete no-no for a startup while talking to investors, Agarwal said, was “Appearing desperate. It can turn-off any investor. A startup founder should understand that this is a business for an investor and there are many choices in front of her/his. Hence, rather than forcing the investor to be rude, it would truly help if you seek advice and connections that can help you move forward. It helps to be listening for a ‘no’. Even better, create a healthy relationship by allowing the investor to say it in black and white.”